Planning Important Questions for CBSE Class 12 Business Studies Limitations of Planning

Limitations of Planning
There are two types of limitations of planning as given below:
1. Internal Limitations of Planning
Internal limitations of planning are:

  • Planning leads to rigidity Once the plans are made it is difficult to change them.
  • Planing does not work in dynamic environment Business environment is constantly changing. Planning cannot foresee everything and thus, there may be obstacles to effective planning.
  • Planning reduces creativity Planning in done by top management. Middle level management merely follow the plans and are not permitted to act on their own. Thus, initiative and creativity gets lost in the process.
  • Planning involves huge costs A lot of expenditure in the form of research, meetings, etc is incurred.
  • Planning is a time consuming process Sometimes a lot of time is taken in drawing up plans and hardly any time is left for its implementation.
  • Planning does not guarantee success Mere making of plans and not implementing them in their true sense, makes the plans useless.

2. External Limitations of Planning
External limitations of planning are:

  • Unforeseen events Natural calamities like floods, earthquakes, etc are beyond the control of managers, that cause failure of plans.
  •  Political outlook Political outlook towards industries and their intervention also affects the company’s plans.
  • Environmental changes Changes in social, economic, legal and technological environment may affects forecasting and planning.
  • Competitors’ strategy Sometimes, a change in the strategy of competitors may lead to failure of planning.

Previous Years Examination Questions

1 Mark Questions
1. State how planning ‘leads to rigidity’? (All India 2010)
Ans. The existence of plan puts managerial activities in a rigid framework. Programmes are carried out according to plans. Managers become more concerned with observing the rules and procedures as laid down in the plan rather than achieving the goals.

2. State how planning reduces creativity? (Delhi 2010c)
Ans. Planning makes managers and workers a puppet. They are expected to follow the guidelines laid down in plans. Everything is pre determined. This discourages the creative thinking and initiative on the part of people working at various levels in the organisation.

3. ‘Planning always leads to success’. Do you agree? Give reasons in support of your answer. (HOTS; Delhi 2009C)
Ans. No, sometimes planning fails because of:
(i) Rigidity                             (ii) Time consuming

4. List any two limitations of planning. (Ail India 2009)
or
State any one limitation of planning.  (Delhi 2008C)
Ans. Limitations of planning are as follows:
(i) Planning does not work in dynamic environment.
(ii) It involves huge costs.

5. Inspite of many advantages, state how planning can be detrimental?
(HOTS; All India 2008)
Ans. Business environment is dynamic in nature, i.e. nothing is constant. Sometimes planning fails to foresee the changes and there are obstacles in effective planning. Hence, planning can be detrimental.

3 Marks Questions
7. How does planning lead to rigidity and reduce creativity? Explain.(Compartment 2014)
or
State any two limitations of planning. (Delhi 2012)
Ans. Two limitations of planning are as follows:
(i) Planning leads to rigidity In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty.
(ii) Planning reduces creativity Plans are usually formulated at the top level. Middle and lower level managers are expected to follow them. Therefore, much of initiative and creativity inherent in them gets lost. They do not take any initiative to make changes in the plans according to the changes prevailing in the business environment.

8. How does planning not work in a dynamic environment and does not guarantee success. Explain. (Compartment 2014)
Ans. (i) Planning does not work in dynamic environment The environment is not static. It keeps on changing. The organisation has to constantly adapt itself to such changes. It becomes difficult to access future trends in the environment. Hence, planning cannot foresee everything and fail to work in dynamic environment.
(ii) Planning does not guarantee success When plans are drawn, they need to be properly implemented. Mere drawing plans does not lead to success. Also, a plan which had been successful earlier may not work out next time, since there are many factors which may change for the next planning period and make the plans ineffective.

9. Rahul, a worker, is given a target of assembling two computers per day. Due to his habit of doing things differently, an idea struck him which would not only reduce the assembling time of computers but would also reduce the cost of production of the computers. Rahul’s supervisor instead of appreciating him, ordered him to complete the work as per the methods and techniques decided earlier as nothing could be changed at that stage.
The above para describes one of the limitation of planning function of management. Name and explain that limitation.
(HOTS; All India 2011; Delhi 2011c)
Ans. The para given in the question expresses the limitation of planning which is explained as unde(1)
Planning reduces creativity Plans are usually formulated at the top level. Middle and lower level managers are expected to follow them. Therefore, much of initiative and creativity inherent in them gets lost. They do not take any initiative to make changes in the plans according to the changes prevailing in the business environment.

10. Define planning. List any two limitations of planning. (All India 2010)
Ans. Planning is the process of thinking before doing. It is the process of determination of a course of action to achieve the desired results.
(i) Planning leads to rigidity In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty.
(ii) Planning reduces creativity Plans are usually formulated at the top level. Middle and lower level managers are expected to follow them. Therefore, much of initiative and creativity inherent in them gets lost. They do not take any initiative to make changes in the plans according to the changes prevailing in the business environment.
4/5 Marks Questions

11.Explain any five limitations of planning.
                              (All India 2014; Delhi 2014,2013; 2012; 2011; 2009)
or
State any four limitations of planning.
                                                               (All India 2012,2011,2009; Delhi 2009)
Ans. Limitations of planning are as follows:
(i) Planning leads to rigidity In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty.                                                                  (ii) Planning may not work in dynamic environment The environment is not static, it keeps on changing. The organisation has to constantly adapt itself to such changes. It becomes difficult to access future trends in the environment. Hence, planning cannot foresee everything and fail to work in dynamic environment.
(iii)Planning reduces creativity Plans are usually formulated at the top level. Middle and lower level managers are expected to follow them. Therefore, much of initiative and creativity inherent in them gets lost. They do not take any initiative to make changes in the plans according to the changes prevailing in the business environment.
(iv) Planning involves huge costs When plans are  drawn up, huge costs are involved in their formulation. These may be in terms of time and   money. According to Koontz and O’ Donnell,
‘Expenses on planning should never exceed the estimated benefits from planning’.
(v) Planning is a time consuming process Planning is a lengthy process. It consumes a lot of time in defining objectives, collection of data, analysis of data and choice of alternatives. Sometimes plans to be drawn up take so much of time that there is not much time left for their implementation.

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